The Dynamics of Chosen Beliefs

We study belief dynamics of an agent who repeatedly "chooses" new beliefs, trading off costs from making worse decisions with benefits from anticipatory utility. We argue that some naiveté about past belief distortions is necessary to explain evidence on motivated reasoning, and derive implications for belief dynamics when the agent naively treats each choice of beliefs as the first (and last) such choice. Such naiveté causes persistent insecurity and fragile optimism in important domains of life, and dogmatic optimism in less important domains. It can also generate "information avoidance" where a naive agent repeatedly, and indefinitely, postpones receiving information.